This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park Brooklyn in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Note: archive at right.

The Empire State Development Corporation's projected tax revenues (see memo, below) for Atlantic Yards could be cut nearly in half under the plausible conditions--neither of which would incur a penalty--of a 25-year buildout and a project cut 25% in size.

Reasons for doubt

Yesterday, I suggested several reasons to doubt the ESDC's calculations of new tax revenue, which rely on a ten-year buildout of the project. After all, even a supporter such as then-ESDC CEO Marisa Lago said the project would take "decades." The Development Agreement allows 25 years, plus extensions.

Also, the projections rely on a full buildout of the project, nearly 8 million square feet, opening after ten years and continuing for the 30 years. But the Development Agreement allows for a much smaller project, less than 5.2 million square feet.

Full buildout, with delay

Though no alternative calculations or assumptions were provided, a helpful reader prepared a spreadsheet to suggest such alternatives. (The ESDC's assumption of a 3% real discount rate is maintained.)

What if, rather than take a decade to build, the full project took 15 years? That would mean only 90% of projected revenue after 40 years. A 25-year buildout would mean 72% of revenue.

This is actually is a very generous, since delays are most likely to affect the office space, which would be the major driver of revenue, and there's no requirement that the office space be built.

Remember, developer Bruce Ratner told Crain's New York Business in November 2009, “Can you tell me when we are going to need a new office tower?”

And, as I wrote yesterday, the costs are most likely underestimated and there's no effort to explain the calculations.

Partial buildout, with delay

What if only 6 million square feet of the project were completed, a 25% reduction? (Remember, there's no penalty for building even less.) And what if it were delayed?

As the spreadsheet suggests, if for some unlikely reason, 75% of the project were completed in five years, the revenue would exceed 83%. If built in the promised decade, revenue would be 75%.

But a project with 75% of the square footage took 25 years to build, tax revenue would be less than 54%.

Again, that's a very conservative calculation, since delays are most likely to affect the office space, and there's no requirement that the office space be built.

The bottom line

Though there are significant reasons to question the ESDC's effort to calculate costs and benefits, let's look at the calculations for New York City.

The ESDC calculates $834.6 million in benefits for New York City. Multiply that by .5374--the adjustment factor for the 25-year buildout and 25% smaller project--and the total becomes $448.51 million. That's only slightly more than the $389.9 million in costs attributed to the city.

And, as noted, a more rigorous calculation likely would both diminish projected revenues and increase projected costs.

Need for clarity

There's never been a thorough cost-benefit analysis.

In October 2008, Port Authority of NY/NJ Chairman Christopher Ward reported back to Gov. David Paterson on the rebuilding plans at Ground Zero. The Times reported:To cover his bets, Mr. Ward presented two dates for each project: a target date and a “probabilistic” date, based on computer analysis of all the many random things that might go wrong.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY.
So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:if market-rate construction is delayed, will the affordable h…

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said.
When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)Selling development …

Click on graphic to enlarge. This is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change, and the project is already well behind that tentative timetable.